Britain’s first tax amnesty is about to kick off – and the chance marks the last-chance saloon for many landlords who have failed to declare their property profits.
The general amnesty is for all taxpayers and is aimed at giving everyone a chance to cough up their dues for reduced fines and penalties.
Those that don’t will feel the full force of HM Revenue & Customs new powers to deal with individuals and businesses.
Property investors who have undeclared profits or gains from disposing of homes can take this chance to settle their tax affairs.
In recent years, HMRC has offered discount penalties to selected groups of taxpayers, including landlords, doctors, plumbers and online traders.
The Chartered Institute of Taxation’s John Whiting said: “This is about encouraging people to come join the system, deal with their affairs and get back on the straight and narrow. The overwhelming majority of the workforce pays their taxes on time and in full. This is about clamping down on the minority who don’t.”
HMRC pledges that anyone who does not take up the offer who is later found to have not declared their full earnings will face steep financial penalties and possible criminal prosecution.
After the plumbers’ amnesty ended earlier this year, five traders were arrested another 600 faced investigation, and one was jailed for failing to declare any earnings and owing HMRC £50,000.
The main tax target is cash businesses – including buy to let, online traders, restaurants and pubs and motor traders.
Owning up will still involve a penalty – paying the tax owed plus 3% interest – but this is cheap compared with the harsh penalties HMRC can charge for late-filing tax information.
“We may not forget every penalty, but will treat those who co-operate leniently,” said an HMRC spokesman.
“Innocent mistakes are unlikely to be punished, especially if the taxpayer asked for advice and received wrong information.”
Property investors are in the firing line – HMRC has also announced a special task force to look at the tax affairs of around 300 landlords in the South East. Similar task forces are focussing on landlords in the North West, North Wales and Scotland.
HMRC’s director-general of enforcement and compliance Jennie Grainger said: “The message is simple: the net is closing. We will find out if you are working off the books, if you haven’t disclosed investment income, or if you have assets offshore. Do not believe HMRC won’t take action – it is only a matter of time before we catch up with you.”
